Finance News

Some meaningful advice for PM ScoMo

The federal government recently announced an increase to the instant asset write-off threshold for small business from $20,000 to $25,000, effective immediately.

The PM has done this in a bid to buy the votes of small business owners in the lead up to this year’s federal election, which he is widely tipped to lose in a landslide.

The reality is though, that the announcement is next to useless, because the instant asset write-off is not being used by the majority of small business owners and some have not even heard of it.

According to a new study of 829 small business owners from H&R Block and Officeworks, 85% have never used the existing $20,000 tax break, and only 40% have even heard of it.

So with that in mind, what can Scott Morrison pledge that might actually swing some votes? Last night on Let’s Talk Business on the Macquarie Radio Network I shared my tips for the Prime Minister.

Guru tip 1 – The PM should apply pressure to state governments to eliminate payroll tax. Payroll tax is a self-assessed, general purpose state and territory tax assessed on wages paid or payable by an employer to its employees, when the total wage bill of an employer (or group of employers) exceeds a threshold amount. The threshold varies from state to state but the simple fact is that payroll tax penalises small businesses for employing people and is a handbrake on growth.

Guru tip 2 – The government has already made some inroads in cutting business tax rates, but I think they need to go further. I’d recommend cutting tax rates for businesses under $10 million turnover to 20%, then 15% to encourage growth. Simply put, the less small businesses pay out in tax, the more they have to reinvest in their businesses and employ more people.

Guru tip 3 – Small business owners would thank the Prime Minister for some extra time to pay BAS statements. Cashflow pressures are a common complaint and small businesses are constantly under pressure from all angles, so longer timeframes to pay BAS would ease that pressure.

Guru tip 4 – ScoMo should offer small businesses training grants as a credit on their tax returns in order for them to invest in the professional development and training for their employees, improving efficiency and productivity.

These outcomes wouldn’t necessarily be easy for the Prime Minister to achieve, but they would have meaningful impact for small businesses, unlike the instant asset write-off scheme.